STRATEGIC MANAGEMENT Class 2 October 8, 2014

Chapter Objectives 1.Describe the nature and role of vision and mission statements in strategic management. 2.Discuss why the process of developing a mission statement is as important as the resulting document. 3.Identify the components of mission statements. 4.Discuss how clear vision and mission statements can benefit other strategic-management activities. 5.Evaluate mission statements of different organizations. 6.Write good vision and mission statements. 2-2

What Do We Want to Become? A vision statement should answer the basic question, “What do we want to become?” The vision statement should be short, preferably one sentence, and as many managers as possible should have input into developing the statement. 2-3

Vision Statement Examples 2-4

What Is Our Business? Mission statement a declaration of an organization’s “reason for being.” answers the pivotal question “What is our business?” essential for effectively establishing objectives and formulating strategies reveals what an organization wants to be and whom it wants to serve Also called a creed statement, a statement of purpose, a statement of philosophy, a statement of beliefs, and a statement of business principles 2-5

Ch 2 -6 Vision & Mission Profit & vision are necessary to effectively motivate a workforce Shared vision creates a commonality of interests that can lift workers out of the monotony of daily work and put them into a new world of opportunity and challenge

The Process of Developing Vision and Mission Statements Select several articles about these statements and ask all managers to read these as background information. Ask managers themselves to prepare a vision and mission statement for the organization. Merge these statements into a single document and distribute the draft statements to all managers Process should create an “emotional bond” and “sense of mission” between the organization and its employees 2-7

Importance of Vision and Mission Statements 1.To ensure unanimity of purpose within the organization 2.To provide a basis, or standard, for allocating organizational resources 3.To establish a general tone or organizational climate 4.To serve as a focal point for individuals to identify with the organization’s purpose and direction 5.To facilitate the translation of objectives into a work structure 6.To specify organizational purposes 2-8

Characteristics of a Mission Statement First, a good mission statement allows for the generation and consideration of a range of feasible alternative objectives and strategies without unduly stifling management creativity. Second, a mission statement needs to be broad to reconcile differences effectively among, and appeal to, an organization’s diverse stakeholders Stakeholders include employees, managers, stockholders, boards of directors, customers, suppliers, distributors, creditors, governments (local, state, federal, and foreign), unions, competitors, environmental groups, and the general public. 2-9

Ch Importance of Mission Mission Resource Allocation Unanimity of Purpose Organizational Climate Focal point for work structure Benefits from a strong mission

Benefits of Having a Clear Mission and Vision 2-11

Ch The Bellevue Hospital, with respect, compassion, integrity, and courage, honors the individuality and confidentiality of our patients, employees, and community, and is progressive in anticipating and providing future health care services. Mission Statement Examples -- The Bellevue Hospital

Ch Social Policy & Mission Social policy should be integrated in all strategic-management activities Mission should convey the social responsibility of the firm

Ch x average return on shareholder’s equity Positive relationship to company performance 30% higher return on certain financial measures Vision & Mission Research results are mixed, however, firms with formal mission statements --

A Customer Orientation A mission statement should: define what the organization is and what the organization aspires to be be limited enough to exclude some ventures and broad enough to allow for creative growth distinguish a given organization from all others serve as a framework for evaluating both current and prospective activities be stated in terms sufficiently clear to be widely understood throughout the organization A good mission statement reflects the anticipations of customers. The operating philosophy of organizations should be to identify customers’ needs and then provide a product or service to fulfill those needs. 2-15

Characteristics of a Mission Statement 2-16

Ch Mission Elements Customers Markets Employees Public Image Self-Concept Philosophy Survival Growth Profit Products Services Technology

Ch The Bellevue Hospital, with respect, compassion, integrity, and courage, honors the individuality and confidentiality of our patients, employees, and community, and is progressive in anticipating and providing future health care services. Mission Statement Example -- The Bellevue Hospital